How Pfizer And The US Gov't Set Up A Fake Subsidiary To Take The Brunt Of Lawsuit Over Falsely Marketed Drugs

from the don't-you-feel-healthy-now dept

The pharmaceutical industry is a huge mess, which has little, if anything, to do with making people healthy. The way the system is currently designed, if it's more profitable for a pharmaceutical company to put you at greater risk, it will do so. And sometimes the US gov't will help them brush it under the rug. Reader Bill Pickett points us to a recent investigative report concerning the big, high-publicity lawsuit the US gov't filed against Pfizer, after the company blatantly went against FDA approvals and marketed a drug for all sorts of alternative uses, which the FDA had specifically noted could be dangerous and could put people at greater risk.

The FDA approved Bextra only for arthritis and menstrual cramps. It rejected the drug in higher doses for acute, surgical pain.
Promoting drugs for unapproved uses can put patients at risk by circumventing the FDA's judgment over which products are safe and effective. For that reason, "off-label" promotion is against the law.

But with billions of dollars of profits at stake, marketing and sales managers across the country nonetheless targeted anesthesiologists, foot surgeons, orthopedic surgeons and oral surgeons. "Anyone that use[d] a scalpel for a living," one district manager advised in a document prosecutors would later cite.

A manager in Florida e-mailed his sales reps a scripted sales pitch that claimed -- falsely -- that the FDA had given Bextra "a clean bill of health" all the way up to a 40 mg dose, which is twice what the FDA actually said was safe....

Internal company documents show that Pfizer and Pharmacia (which Pfizer later bought) used a multimillion-dollar medical education budget to pay hundreds of doctors as speakers and consultants to tout Bextra.

Pfizer said in court that "the company's intent was pure": to foster a legal exchange of scientific information among doctors.... But an internal marketing plan called for training physicians "to serve as public relations spokespeople."

Where the story gets scary is in what happened when all this came out. Federal officials announced a criminal case over this, but they didn't actually sue Pfizer directly. Instead, they sued a (not kidding) subsidiary of a subsidiary of a subsidiary of a subsidiary of Pfizer, which was basically set up just take the brunt of this lawsuit:

But it was only that last one, Pharmacia & Upjohn Co. Inc., that was sued -- and the report also notes that this company just happened to be set up the same day that Pfizer and federal officials worked out a deal for it to plead guilty -- even though it, as an entity, hadn't done anything.

Why did they do this? Well, if Pfizer itself had been found guilty then it would be barred from Medicare and Medicaid, and prosecutors figured it would effectively close down Pfizer -- and Pfizer was deemed "too big to fail" like that. Why? I have no idea. If the company really did have to close down, it seems likely that others would have picked up the company's various products -- and perhaps done so without putting people's lives at risk.

Really, the problem here is the way the entire system is set up. The FDA requires expensive and involved clinical trials. This is very good, because we want to make sure that any drugs actually do what they're supposed to do, and don't have serious side effects or cause even worse problems. But, the system is currently set up so that the pharmaceutical company itself is in charge of paying for and running those clinical trials, which creates two very problematic situations. First, it gives the company all sorts of incentives to fudge the results or to pretend the results said something different than they really did (see the example above, or Merck with Vioxx) and second, it contributes to the "expense" that a drugmaker can claim comes from developing a new drug, which is part of why it demands patent rights. But if you break out the costs of the clinical trials, the marketing-hidden-ad-development-costs, and the amount of research that's actually funded by gov't grants -- you find that pharmaceutical firms really aren't spending nearly as much as they claim. A big part of the issue is the clinical trials, and that's leading to all sorts of questionable behavior. In the past, some have suggested that such trials should be conducted by the gov't, rather than by the pharma companies themselves. While I'm not sure that's the answer, it's pretty clear that the existing system is not working, if our end goal is to make people healthier.

Individual responsibility.

. . . is the answer. real human beings have to be held responsible and liable for corporate decisions. You sign off on a product that hurts folks, you pay the penalty. This is one place Chinese law is ahead of American. Aww the lead scientists did not effectively test the drug, Jail them, folks died? behead them. That should be enough incentive to get the job done right.

Re: Individual responsibility.

That is not "ahead". That punishes any attempts at progress, and instead promotes copying what others have already done, since there's no risk. How is that a better situation in the world of drug development? We already have plenty of companies making generics.

Cronyism

This is what happens when business and gov't get into bed together. If Pfizer did not market a product honestly and it caused harm, they need to reap what they sow. The gov should not be protecting Pfizer from lawsuits simply because it does not want to see Pfizer go away.

Mike, I agree the system is the problem, but how do you get around the fact that the drug co will have to pay for the trials? Whether it's a 3rd party or the gov running them, it's still open to corruption.

IMO, the FDA should be optional. If you want to spend the billion dollars and 10 years for the FDA label, by all means, go right ahead. But if you don't, then you can sell your product without the label. Let the market decide if the FDA label is necessary on all products.

Too bad the FDA is paid off anyways

There's not a dang bit of good that comes from the FDA. Most of the people on the FDA's panels have been, are currently, or have a vested interest in the companies they support. Look at Monsanto for example.

Monsanto's genetically modified corn grains are proven by lab studies to cause cancer and a slew of other problems in Mice and Rats. Yet it's good enough to be given as feed to animals and humans alike? Any meat you eat from grocery stores has been grown through corn fed animals. And any of you think that there's no issue with that?

Hello rise in cancer, birth defects, hormone problems, diabetes, and a long list of other issues!!!! When will people wake up that the FDA has been bought by the greedy companies making the harmful foods we eat and the drugs we're SUPPOSED to use!?

Look at the statistics people... have we gotten healthier or sicker???

Just one more...

..example in many that prove the FDA is not always looking out for the consumers. It's not coincidental that so many ex FDA employees end up working for pharmaceutical companies.. and no surprise that so many things get categorized as "diseases" so that only drug companies can generate cures and treatments for them. Obesity a disease..really? Stop stuffing your face.. there's a cure. No matter how much I may want to blame genetics or other abnormality, I didn't get fat from eating right...

Regulating a healthy market?

Regulated markets exist because pure capitalism has no morals. Pure capitalism is about seeking the most efficient method of accomplishing a goal. Regulated capitalism provides moral values in the form of costs for pure capitalism to take into account. Pfizer's conflict here arises because they were not properly taking the regulated values into account and were instead following a more pure capitalism of maximizing profit. The consequences have been severe, they have lost a very large portion of profit and hopefully that will make Pfizer consider regulations with more weight in the future. What I find troubling is that if Pfizer is "too big to nail" then perhaps it should be broken up into companies that are not "too big to nail." This is a systemic issue, a healthy market depends on a diverse set of players that follow the regulations while seeking efficiencies to make a profit. The fine penalized the profit but does not effectively address the organization of the player(s). If Pfizer itself had been denied a major contract because they broke the regulations then they would have had to restructure themselves and their assets to continue to sell their products. Restructuring would have reflected better the consequences of their actions and the new player(s) that emerged from the restructuring would also have had more incentive to follow the regulations. Pfizer has still been dealt a large blow: they lost a very significant portion of profit. The issue I have is that simply removing the profit does not fully address the structure of the organization that collected it.

FDA approved Drugs (what a joke)

Lets looks at what has happen over the last 20 years, with the increase of cancer, diabetes etc... What are the drugs doing besides making the rich richer? The FDA and all of the drug companies have let the American people down. I really starting to think it's all about the money and controlling the human population. God I hope I'm wrong. When we come into this world were bold and helpless, that's how we leave it as well, except before we die we give every last cent back to drug companies and nursing homes and leave nothing to our children. I really think the FDA should be investigated.

I blame the judges

Ok, so the FDA and the companies involved are in bed together. The legal system, which should be our defense against such eventualities, is also shown to be corrupted. You can see this across all facets of our society. I'm sure there is a chain of twisted acid-logic, to be presented as jurisprudence, in justification of the decision allowing this accomodation. But it's wrong and they know it, unforgivable.

Re: Re: Individual responsibility.

Because there has to be an established value system, which is more important: Peoples wellbeing? or profits? "life liberty and the pursuit of happiness" is seen as a lip service joke to the rest of the world. Credibility America?

If the primary purpose of big pharma is not to make people WELL, but instead to endlessly sell them symptom suppressing product. Why do we need them at all? For thousands of years the Chinese medical system has taken a different view about the role of medicine, (not entitled to payment unless the patient is cured) and now you think they should Americanize it because the American health care system is better???

Why not have the Govt take over and make it a not-for-profit kind of thing. People would still make new medicines, since dead people don't help anyone, and they would still get paid as researchers and stuff. The trials wouldn't be motivated by greed, since there's no-one benefiting from pushing through unsafe meds. Without someone at the top making money, there's no more incentive to fuck shit up.

So sue them, let them fail, pick up the pieces, and everyone wins (except for the suits at the top that caused all this).

Re: Cronyism

Let the market decide if the FDA label is necessary on all products

Agreed. I seriously doubt whether the remedies we (the regular people) have for malfeasance by drug manufacturers would even be affected one bit. Whether the drug is FDA approved or not is irrelevant when someone is actually injured or killed by negligent drug design or manufacturing.

People make the argument that you *need testing and validation of drugs, and I tend to agree. Where I tend to disagree is when it is asserted that it must be through government action alone that people can be protected.

I feel drug testing would be better off in the hands of a not-for-profit, democratically monitored (as in, without the intervention of a central governmental power) entity run by rotating leadership drawn from private, independent medical professionals. Its charter, guidance and procedures completely "open-source".

Re: Regulating a healthy market?

How does society prevent regulated capitalism from evolving into Max Weber's political capitalism, where profits are extracted by political prerogative?

The "to big to fail" premise is false, as is the notion that morality of any sort is derived from the economic system. Unregulated capitalism conducted by moral people is moral. Regulated capitalism when regulated by immoral people is immoral.

Re: Regulating a healthy market?

I disagree completely - capitalism has morals. It is the only economic system where 2 parties enter into an agreement of their own free will and exit better off.

While it is not in a company's best interest to cause harm to its customers (customers can't buy from you if they're dead), some companies don't do what's in their best interest. When that happens and they cause harm to a customer, the courts are there as a medium for redressing those grievances.

There is no such thing as too big to fail. That's a BS title assigned by government for some political purpose. Any company that grows to a given size has done so because they're leveraging their competitive advantages and are selling products people want to buy. There is no need to break up those companies as there is sufficient competition in the marketplace. In fact, breaking them up would make the system worse as you are removing the economies of scale the large company could employ to keep costs down.

Your issue is not with capitalism but with government involvement in preventing the proper penalty from being assessed to the offending party. Those are separate issues.

Re: the real question

make people sick

I thought a published writer would have realized by now that pharma companies don't actually want to make people healthier, then their business would dry up. They want to make people sick, or at least believe their sick, so the pharma's can sweep in with their brand new miracle drug and make billions.

Seriously though, are you saying that the current review process for new drugs is some guy reading a report on research conducted by the company making said drug, saying "yah this looks good" and stamping it 'approved'? Thats incredible. Doesn't the FDA do more checking into food products like beef and chicken than what they apparently do for new drugs?

also, how can you create a company in one day? does this mean they hired a guy and put him in charge just so they could sue the company and fire him?

Re: Re: Individual responsibility.

There's a difference between "we tried something new that we thought would be safe and effective, but it didn't work well" and "we did the cheapest thing we could knowing it was dangerous because we thought we wouldn't get caught, but we did get caught". In other words, a difference between a "good faith" decision and a "screw the consequences" decision. The first shouldn't be punished, the second should.

Re: Too bad the FDA is paid off anyways

Re: Re: Regulating a healthy market?

I disagree completely - capitalism has morals. It is the only economic system where 2 parties enter into an agreement of their own free will and exit better off.

Like when the buyer and the seller both benefit from the sale of a slave? Of course the slave doesn't count because he had no say in "the deal".

When that happens and they cause harm to a customer, the courts are there as a medium for redressing those grievances.

Wait a minute. Now you're getting the government involved? I thought "the market" was supposed to be self correcting and able to enforce moral behavior all by itself. What are you, some kind of socialist or something?

Your issue is not with capitalism but with government involvement in preventing the proper penalty from being assessed to the offending party. Those are separate issues.

What is "the proper penalty"? Should that be determined by the government or the market? Or should the government really just be up to the highest bidder? I think you're confused as to whether you're really a capitalist or a socialist.

Re: Re: Regulating a healthy market?

My issue is not with capitalism: I think capitalism is wonderful. I also think that capitalism needs to be carefully regulated. The "two parties" ideal is correct, capitalism allows everyone to better themselves. Where I believe capitalism needs to be regulated is when each party is composed of nested sub-parties. Two businesses may be better off through a deal but what if their manufacturing process harmed other parties? Or one party did not honor a minimum standard of living for their employees so they could manufacture goods cheaper? Capitalism is an excellent method for dealing with scarcity and the only reason we can't have pure capitalism is that capitalism is not a person with any feelings and only seeks efficiency, it does not seek what is "right" and that is what regulation codifies. By whatever standard you consider to be "right." Regulation applying to all parties equalizes the costs involved so regulation simply puts your nations "morals" into the capitalistic framework and from there the beauty and magic of capitalism seeks efficiency within those flavors. As a side note when you consider intra-nation parties dealing with each other there is disparity in the cost of doing business because different nations encode different "morals."

You are right, I don't think that the proper penalty was served in this case. I think the huge fine Pfizer received will do quite a bit to restructure them but I fully believe that instead of trusting them to restructure themselves that they should have received the "corporate death penalty" and had the restructuring forced onto the market through either breaking them up or denying the medicare/aid contract. I don't trust companies to change themselves - they just don't seem to be capable of doing it most of the time - I think that for the health of the market itself it would have been better to cut them up into pieces and then hung those pieces out in the public square to terrify the next generation of companies that would have grown to replace them. To me, that would have effectively addressed what I see as the structural issues.

make people sick

I thought a published writer would have realized by now that pharma companies don't actually want to make people healthier, then their business would dry up. They want to make people sick, or at least believe their sick, so the pharma's can sweep in with their brand new miracle drug and make billions.

Seriously though, are you saying that the current review process for new drugs is some guy reading a report on research conducted by the company making said drug, saying "yah this looks good" and stamping it 'approved'? Thats incredible. Doesn't the FDA do more checking into food products like beef and chicken than what they apparently do for new drugs?

also, how can you create a company in one day? does this mean they hired a guy and put him in charge just so they could sue the company and fire him?

Re: Re: Regulating a healthy market?

I think that unregulated capitalism can start out as moral but it is not sustainable over time. As soon as one party cuts a corner say polluting the environment for a cheaper manufacturing process or pays their workers an unfair wage then it becomes a race to the bottom. To me the market is what needs to be regulated and then within the market the capitalistic feedback seeking efficiency is a powerful way to live.

Re: Re: Re: Regulating a healthy market?

As soon as one party cuts a corner say polluting the environment for a cheaper manufacturing process or pays their workers an unfair wage then it becomes a race to the bottom.

No company would do that in a free market because if they did then they would get a bad reputation and nobody would buy their products. And that's why there should be no government regulation in a capitalist system.

Re:

"Ban smoking, tax fat people at higher rates."

Doubtful that would do anything other than create another war on something that does not go well.

You think the state of health care is better than ten years ago, is there any data to support that? (not pharma data) Certainly there are many more three letter acronyms than ten years ago, maybe that is a measure of progress.

Re: Re: Re: Re: Regulating a healthy market?

That completely ignores the fact that money and power are exponential creatures -- all you need is to get more power than your competition, then you can buy out the media and lie to everyone about how great your stuff is when it actually kills you... and with no regulation at all, there's not even a *supposed* legal basis to step you.

No system can work when corrupt people are permitted to be in power; there is no set of checks and balances, or limits, or laws, which can stop evil people from being evil.

Until someone figures out how to prove intent (say, with a mind reading device), nobody is going to be able to stop this mess for good, and the price will continue to be paid in the blood of innocents.

Doubtful that would do anything other than create another war on something that does not go well.

The two things that would improve Americas health is stop smoking and lose weight. Those are facts, if you don't like them, well, that is too bad.

As for the health improving? One pretty good indicator of that is life expectancy. The fact is, life expectancy is better today than it was 10 years ago, 20 years ago, ect. You hear about cancer more today, but that may in fact be because people are living longer. Fewer people die younger in life only to be hit with cancer in their older years. I can guarentee that dmentia will be going up in the future because more and more people will live longer lives. How about AIDs? People live longer and longer with AIDs. I remember when that was the final word, be told you had that and you were dead. I know Magic Johnson is still walking around, something must have changed.

Re: Re: Re: Regulating a healthy market?

Like when the buyer and the seller both benefit from the sale of a slave?
The good being sold in the transaction is irrelevant. Neither the seller nor the buyer were coerced to enter the transaction.
Wait a minute. Now you're getting the government involved? I thought "the market" was supposed to be self correcting and able to enforce moral behavior all by itself.
I never said the market will correct itself. I never said the free market was perfect. The market can't be perfect as it is comprised of people, who are imperfect. The courts were established under the Constitution to act as a retaliatory force when our liberties are infringed upon.
What is "the proper penalty"?
It's whatever the laws have established as the penalty for such a crime. In the case of the article, it would mean potentially going out of business and losing contracts.
I think you're confused as to whether you're really a capitalist or a socialist.
Far from it. Socialism is state-owned capital and economic engineering (the gov determines where the capital should be allocated). That has never and will never be a sustainable model for government.

Re: Re: Re: Re: Re: Regulating a healthy market?

"all you need is to get more power "

If you mean political power, then what you are asking is for free market distortions.

"than your competition, then you can buy out the media and lie"

No, the media can only be bought out because there is a government sanctioned lack of competition on media outlets. Otherwise, it can't be, if the media is broken in a free market people will know and they will build new media and communicate to each other through the new media, new media that won't simply be bought out because doing so would simply create new media and customers won't go to broken media. But as it stands the government prevents new media from being created by granting monopolies.

Re: Re: Re: Re: Re: Regulating a healthy market?

"and with no regulation at all, there's not even a *supposed* legal basis to step you."

the assumption is that this regulation, created by the government, is better able to determine what's in my best interest than me. I take offense to this notion, I will seek honest media and will go to great lengths to ensure the quality of what I get in a free market, so long as the broken government (which has no legitimacy) does not get in my way, which it currently tries to.

Re:

In other words, the same laws that apply to small corporations don't apply to big corporations or, more specifically, to corporations that are "too big to fail." This is nonsense, big or small, if you do something wrong you should get punished just like anyone else. Why should different punishments apply to you just because you're a big corporation? If that's the case, why not just change the laws so that small corporations and individuals can get the same treatment as Pfizer.

Pharma off label

To the author of this post,
could you please send me the source for the info on the subsidiary that was set up to take the hit for the criminal fine (for marketing Bextra off-label)?

I'm investigating another off-label promotion - BIG TIME promotion -- of another of Pharmaci Upjohn's drugs. I knew about the charges for BEXTRA but didn't know about this further scam.

Also I am trying to find out if Pharmacia has any connection to manufacturers of Flumazenil, which are all Chinese, as far as I can tell. Do you know if Pharmacia has any Chinese subsidiaries or other connections to Chinese companies?

By the way, with the king of propaganda now on board (Monsanto - agent orange, Roundup ["safe as table salt], terminator seeds and bovine growth hormone), Pharmacia will be getting all kinds of tips on how to deceive the public.

If you want to get a detailed, documented account of how FDA waived conflicts of interest between assessment committee members and Upjohn regarding Halcion, then read John Abraham and Julie Sheppard's paper on this - Univ of Sussex, School of Social Sciences.

There is NO excuse for not putting company members in JAIL for these activities. People taking their dangerous drug kept on the market through corruption have rec'd DEATH sentences for crimes they've committed due to prescription drug intoxication. I'm referring to Halcion -- known for its deadly effects, kept on the market after banning in the UK, it's now being HEAVILY promoted off-label as a dental sedative -- AT DOSES DOUBLY EXCEEDING THE MRD -- AND EVEN HIGHER.